Question

Flexible Overhead Budget

Leno Manufacturing Company prepared the following factory overhead cost budget for the Press Department for October of the current year, during which it expected to require 9,000 hours of productive capacity in the department:

Variable overhead cost:
Indirect factory labor	$79,200
Power and light	4,050
Indirect materials	21,600
Total variable overhead cost		$104,850
Fixed overhead cost:
Supervisory salaries	$36,700
Depreciation of plant and equipment	23,070
Insurance and property taxes	14,680
Total fixed overhead cost		74,450
Total factory overhead cost		$179,300

Assuming that the estimated costs for November are the same as for October, prepare a flexible factory overhead cost budget for the Press Department for November for 7,000, 9,000, and 11,000 hours of production. Round your interim computations to the nearest cent, if required. Enter all amounts as positive numbers.

Leno Manufacturing Company
Factory Overhead Cost Budget-Press Department
For the Month Ended November 30
Direct labor hours	7,000	9,000	11,000
Variable overhead cost:
Indirect factory labor	$	$	$
Power and light
Indirect materials
Total variable factory overhead	$	$	$
Fixed factory overhead cost:
Supervisory salaries	$	$	$
Depreciation of plant and equipment
Insurance and property taxes
Total fixed factory overhead	$	$	$
Total factory overhead	$	$	$

Answer 1

STATEMENT OF FLEXIBLE FACTORY OVERHEAD COST BUDGET FOR NOVEMBER

DIRECT LABOUR HOURS	7000 HRS	9000HRS	11000HRS
VARIABLE OVERHEAD COST
INDIRECT FACTORY LABOUR	$61600	$79200	$96800
POWER AND LIGHT	$3150	$4050	$4950
INDIRECT MATERIALS	$16800	$21600	$26400
TOTAL VARIABLE FACTORY OVERHEAD	$81550	$104850	$128150
FIXED OVERHEAD COST
SUPERVISORY SALARIES	$36700	$36700	$36700
DEPROICIATION OF PLANT	$23070	$23070	$23070
INSURANCE AND PROPERTY TAX	$14680	$14680	$14680
TOTAL FIXED OVER HEAD	$74450	$74450	$74450
TOTAL FACTORY OVERHEAD	$156000	$179300	$202600

NOTE: Variable expenses will vary with variation in hours worked but fixed overhead costs will remain fixed in all situations.